The Time It Takes
It takes a lot of time to sell a home with the best possible outcome. What is your time worth? Buyers and agents alike do not generally take For Sale By Owner (FSBO) sellers seriously, and it takes a lot of time to get serious buyers and their agents to work with you. For a better understanding of the complex steps and processes involved in a home sale, check out My Action Plan for Sellers.
Marketing Ability and Sunk Costs
FSBO home sales have declined at a steady pace as online real estate searching has grown. If you want your home to be seen by as many buyers as possible, a top agent will employ these marketing tools and more:
- A professional photographer
- A professionally written property description
- The ability to list the property in the MLS (Multiple Listing Service)
- The ability to post the listing in the proper format simultaneously on most of the major marketing sites in the world, including Zillow, Realtor.com, and many more
It seems intuitive, selling yourself will save you money, right? Wrong. Listing agents incur up-front costs to make sure a house sells on the best possible terms for the client. If you try to sell it yourself, those costs can easily be sunk.
The Myth of Saving On Commission
Selling your home FSBO will not save you money. The average sales price when an agent sells a home is more than when a homeowner sells their own home, by about 10-26% net profit. Selling FSBO, you will pay the buyer side agent a commission anyway; therefore, you are realistically looking at a 3% savings on listing agent commission if you sell yourself. Still considering saving that 3%? Remember, a licensed real estate agent will likely bring you at least 10% more profit, and then the math is easy—FSBO doesn’t really make sense.
FSBO Liability
If you sell you home FSBO, you are opening yourself up to potentially serious and costly liability issues. Licensed agents have Errors and Omissions Insurance, which protects them if a mistake is made in a contract; however, they also have the knowledge and expertise to avoid numerous issues by making sure the proper forms accompany a solid, compliant contract.
Perception Is A Huge Factor
How do people sometimes perceive FSBO sellers?
- They are not serious
- They need to sell fast, and will likely take less for their home
- They will entertain low-ball offers
- They are just testing the market
- They will only sell for way over market value
- They don’t see the value in working with an agent to sell their top asset
- There must be something wrong with the house
- It’ll be too difficult to work with the FSBO seller, because they don’t know what they are doing
- They won’t be willing to pay a buyer’s agent
Improper Pricing
So you’ve decided to sell your house FSBO. Where are you going to price it? You probably have a great career, and you have a lot of knowledge in many areas, but are you a real estate expert? Do you know where to price your biggest asset? Too low and it appears there are issues with the house, too high and it will sit on the market, making potential buyers wonder why it hasn’t sold. This is the overall biggest reason FSBO properties don’t have favorable outcomes.